58,000 East Mids jobs could be axed, warns PwC
East Midlands' businesses are being warned that about 58,000 jobs could be shed in the public and private sectors by 2014/15, according to research by PricewaterhouseCoopers (PwC). This figure represents about 3.2 per cent of the total jobs in the region, which could be axed as a result of the imminent public sector spending review.
The figure is slightly lower than the UK average, which suggests 3.4 per cent of the workforce could face the axe.
The distribution industry, which is particularly strong in the East Midlands, is also likely to see national job losses of 25,000.
Mark Shires, senior partner at PwC in the East Midlands, said: "Predicted levels of public and private sector job losses will be a drag on the pace of the economic recovery, but should not derail it altogether. While private sector employment may be affected as much as the public sector, this could be mitigated by increased labour market flexibility on wages and hours worked, as we saw in 2008-9 recession.”
According to PwC’s report, entitled Sectoral and Regional Impact of the Fiscal Squeeze, almost half a million private sector jobs could be lost nationally as a result of the upcoming public sector spending cuts. Private sector gross output could be reduced by around £46bn per annum by 2014/15, due to the impact on suppliers to the public sector.
When combined with Office for Budget Responsibility’s (OBR) public sector job loss forecasts, nearly one million people nationally could face unemployment due to public sector cuts.
However, the report also highlights the potential for job creation in the private sector resulting from more employment opportunities coming from increased activity in areas such as the outsourcing market and interest rates staying lower for longer due to the fiscal consolidation.
Stephanie Allen, East Midlands public sector leader at PwC, suggested that some sectors could benefit from the spending cuts.
She said: “One sector likely to see growth opportunities from spending cuts is outsourcing, and not only in back office services. Government and public sector organisations will look to reduce their non-core and fixed cost operations by increasing the use of private and voluntary sector organisations for the delivery of front-line services.
“Organisations with flexible supplies of labour, such as manpower service providers, will have new opportunities in future. Partnerships between government and private sector manpower providers could be put in place to performance manage and retrain staff, find new employment for them where possible, and to manage redundancies when necessary.”
